The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Dividend Reinvestment - A Tax Nightmare?||Date: 7/6/2008 9:12 PM|
|Author: ptheland||Number: 101281 of 125003|
And don't forget that you have to adjust your basis for the taxes you paid on the dividends throughout your holding period.
I forgot to address this error.
You don't need to make any adjustments for taxes paid. You just need to be sure to get the right facts in the first place. If some portion of the dividend is used for something other than purchasing stock, then it's not a part of your basis.
So if you got a dividend of $100 and the entire dividend was reinvested, it doesn't matter that you had to use some other money to pay perhaps $25 of tax on the dividend. The entire $100 was reinvested, so the entire $100 is part of your basis.
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